An economist is warning consumers about a potential economic downturn due to President Trump’s trade war and tariffs. Trump is pushing for the production of electricity at U.S. coal plants to combat inflation and dismiss environmental concerns. The 25% tariffs on steel and aluminum recently went into effect, with additional tariffs scheduled for April 2. While there are fears that these tariffs could drive up prices, fuel a recession, and lower stock prices, Trump is not considering any exemptions. Despite these concerns, the stock market has been rallying, indicating a level of confidence.
Economists generally agree that tariffs raise consumer prices and negatively impact economic output and income. While tariffs can create more demand for domestic manufacturers, they are also part of the global supply chain and can be affected by tariffs. Trump’s motivation for implementing tariffs is to gain cooperation from countries like China, Canada, and Mexico in addressing issues such as illegal immigration and drug trafficking.
The threat of tariffs and rising costs of everyday items are raising concerns about the potential for a recession. A recession is defined by an extended period of economic downturn, marked by high unemployment, lower profits for large companies, stock market declines, and falling home prices. Experts and officials may not always agree on the start or end of a recession. Trump has not commented on whether his tariff plan could lead to a recession.
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